Debt Consolidation
Debt consolidation offers a means to steer away from high borrowing costs. If you're considering this strategy, get started by making a list of your debts. Are your credit cards teetering at the top of their limits? Do you make regular use of your overdraft protection at the bank? Do you have escalating tax liabilities? What about any department store cards? And - quick - what was the interest rate on those balances last month? Have you added it up?
Industry Canada, monitoring consumer data, reports average interest rates for department store credit cards as high as 28%. Even competitive-rate credit cards will often run at 18% or higher. And this is at a time when some mortgage rates are below 5%.
Consider this, then. If you have equity in your home, you could take advantage of attractive
mortgage rates to save a bundle on interest charges. Compare current mortgage rates with the
rates charged on your other debts. Get our professional advice on whether it may pay to
consolidate your debt, such as credit card debt and tax liabilities, with your mortgage.
You can lower your payments, save some money on interest, and improve your cash flow.
Calculating the Benefits of Debt Consolidation
Let's take a look at a scenario demonstrating how refinancing could help with debt consolidation. Here is an example:
Even if you are in the last year or two of your mortgage, it may make sense to renegotiate your mortgage now and roll in your other debt at a lower rate. You may benefit from this kind of debt consolidation through refinancing your home. Your best move is to have a mortgage specialist to outline your options for using mortgage to consolidate your debt.
Lower high borrowing costs with debt consolidation
Expect unexpected when refinancing your mortgage
Estimate your Costs with Mortgage Refinancing Calculator
Potential Benefits of Home Mortgage Refinancing
